Chronic Underinvestment Could Push Oil Prices Higher In 2022 (29 December 2021): By Alex Kimani - Long-suffering Americans grappling with runaway inflation are finally enjoying some reprieve. After a relentless climb, prices at the pump have been heading south, with national average gas prices tumbling to a 10-week low of $3.28 a gallon, according to AAA. Fuel prices started leveling out after President Joe Biden announced on November 23 the biggest-ever release from the Strategic Petroleum Reserve, though experts have dismissed it as a mere band-aid. Whereas many people have placed the blame for high gas prices on the Biden administration, the real culprit has more to do with Wall Street than Pennsylvania Avenue. The genesis of today's high gas prices can be traced back to financial pressure on oil companies from a decade of devastating losses and poor shareholder returns that have forced them to dramatically alter their business models. For years, Wall Street has pressured oil and gas companies to cut capex, and shift their cash to financial goals like boosting dividends and buybacks, paying down debt, as well as decarbonization, after the fracking revolution left the U.S. shale patch bleeding cash and deeply indebted. Consequently, investment in new wells has crashed 60% since its peak in 2014, causing U.S. crude oil production to plummet by more than 3 million barrels a day, or nearly 25%, just as the Covid virus hit, and then failed to recover with the economy. (Source: Oil Price)
Top Automakers Are Fueling A Battery Plant Boom In The U.S. (29 December 2021): By Julianne Geiger - In August, President Biden signed an executive order that set a target to make 50 percent of all new vehicles sold in the United States in 2030 zero-emission vehicles—and ironically garnering the support of some of the biggest names in auto. And now, there is a new push to build a slew of battery plants in the United States. In America, Joe Biden said back in August, “The future of the auto industry is electric,” adding the point that those vehicles will be made in America. To that end, the Department of Energy’s Vehicle Technologies Office has listed 13 new battery plant projects that are scheduled to be completed within the next five years. (Source: Oil Price)
Europe reverses Russian link to tap storage (28 December 2021): Gas traders are relying on stockpiles to supply European buyers and avoid paying near record-high prices, industry sources and market analysts said, explaining the unusual reverse in direction of flows through a major Russian pipeline. The 33 Bm3 Yamal-Europe Pipeline, which accounts for about one sixth of Russia's exports to Europe and Turkey, has been in reverse mode since Dec. 21, meaning gas is being shipped east from Germany to Poland. In Poland, which failed to conclude a new gas supply deal with Russia last year, some traders have already used their annual contracted volumes from Russian supplier Gazprom. That would mean paying high spot prices if they buy extra gas from Russia, so they are instead drawing from storage. Their hope is that by the time stocks run low, prices will be cheaper, but the risk is over-reliance on stocks will keep the market high for longer. (Source: Gas Processing)
China Oil Demand Seen Peaking In 2030 (27 December 2021): By Irina Slav - Crude oil demand in China is set to peak in 2030, until then driven by robust petrochemicals demand, research from state oil giant CNPC has suggested. This is a revision on 2020 research from the same organization, CNPC Economics & Technology Research Institute, which at the time saw oil demand peaking at 730 million tons annually in 2025. Now, the institute expects demand to peak at 780 million tons, Reuters has reported. Fuel demand, however, will peak years before crude oil demand, ETRI also said. It now sees gasoline, diesel, and kerosene fuel demand peaking in 2025 at some 390 million tons per year as the electrification of transport grows in the world’s largest market for electric vehicles. Coal consumption will also peak around 2030, the research organization also forecast, seeing the peak at around 3.6-4 billion tons. By 2050, coal generation capacity will only be used as backup, ETRI researchers said. (Source: Oil Price)
Waste Disposal Back In The Spotlight As America Ramps Up Nuclear Sector (26 December 2021): By Felicity Bradstock - For years the U.S. federal government has been saving to invest in a long-term nuclear waste disposal solution. But despite collecting the funds, no clear plan has been made. As we see certain states developing new nuclear projects it begs the question, where will the waste be dumped? At present, the U.S. government is sitting on a $44.3 billion fund for the construction of a nuclear waste disposal facility. Starting in the 1980s, the fund was aimed at finding a safe solution for the containment of the waste, but to date, nothing has been established. After suggesting three potential sites between 1982 and 1987 the government made plans to create a site in the Yucca Mountain in Nevada. (Source: Oil Price)
Europe Faces Rolling Blackouts Amid Energy Crisis (24 December 2021): By ZeroHedge - Europe's energy crisis worsened this week when Kosovo introduced rolling blackouts to most of its two million citizens, according to Bloomberg. On Thursday, the Kosovo Energy Distribution Services (KEDS) announced rolling two-hour power blackouts for 2 million people due to an "overload" of its electrical grid. KEDS asked customers to reduce power given "insufficient internal generation to cover consumption and the global energy crisis." The Balkan country, Europe's poorest nation, experienced a technical issue at its largest coal-fired power plant that had to shut down last month, which forced the government to import electricity at high prices. (Source: Oil Price)
The Real Reason Why Oil And Gas Is Here To Stay (21 December 2021): By Julianne Geiger - The rallying cry around global climate initiatives grew increasingly boisterous leading up to COP26 this year. The media posited what bold, new goals would be set. Others questioned the likelihood that those claims would be fulfilled. But the real reason why global climate targets--including those set at COP26--are doomed to fail has barely been touched on: cognitive dissonance and superconsumers–and it's why the oil and gas industry can likely rest easy. In oversimplified non-psychiatry-speak terms, cognitive dissonance is when we feel some angst over the disconnect between how we wish to see ourselves versus how we really are. In order to ease the angst over this incongruity, we must give ourselves a fair dose of dishonesty. (Source: Oil Price)
Three Risks All Investors Need To Consider In 2022 (16 December 2021): By Michael Kern - With the current trading year drawing to a close, experts are already making forecasts about the coming year largely based on the trends that have defined the current year. However, unlike in previous years, analysts are acutely aware that the Covid years have been littered with predictions that never panned out, with the pandemic triggering some serious market idiosyncrasies. For starters, Goldman Sachs points out that equity market breadth has narrowed sharply, with just five stocks accounting for 51% of the S&P 500’s return since the end of April. 1. Omicron and More Lockdowns; 2. The Inflation Threat; 3. China Hits a Great Wall (Source: Oil Price)
Almost All Of Russia’s Oil Could Become “Hard-To-Recover” In The Coming Years (15 December 2021): By Felicity Bradstock - Russia does not appear to be backing down from its oil and gas commitments, with speculation over new partnerships with India, as well as plans to up its crude output from January, its fossil fuel industry is going from strength to strength. Russia and India signed several energy cooperation agreements last week, as Russia plans to send just under 15 million barrels of oil from Russian producer Rosneft to India throughout 2022. India, the world’s third-largest crude consumer, currently imports around 85 percent of its oil needs, mainly coming from Middle Eastern suppliers. The country’s imports have soared this year, after a difficult 2020 when pandemic restrictions drove down energy demand for several months before it shot back up in 2021. Through its most recent agreements, the two countries hope to stabilize oil prices, with the Brent benchmark increasing by 43 percent this year, reaching $76 a barrel this month. The Kremlin stated of the contract, “The sides reaffirmed their commitment for increasing sourcing of Russian crude oil on long term contracts through preferential pricing, strengthening LNG imports to India, and the possible utilization of the Northern Sea Route for energy supplies.” (Source: Oil Price)
OPEC Confident About Oil Demand Despite Omicron Cases (14 December 2021): By Josh Owens - Despite fears of Omicron playing a large role in markets and the media, OPEC raised its global oil demand forecast for Q1 2022 this week, arguing that Omicron would only have a mild and brief impact. In its monthly report, OPEC expects world oil demand to average 99.1 million b/d over January-March 2022, more than 1 million b/d higher than its forecast a month ago. Having hiked next year’s annual average, too, OPEC forecasts global crude intake to average 100.8 million b/d in 2022, roughly on par with the pre-pandemic year of 2019. Simultaneously, the December report shows that Saudi Arabia and Iraq continue to lead OPEC in terms of month-on-month production increases, on the back of Nigeria failing to overcome its supply outages. (Source: Oil Price)
S&P Global Platts: Energy Supply Will Catch Up With Demand In 2022 (13 December 2021): By Charles Kennedy - Oil and gas supply will grow faster in 2022 than it did in 2021 to the point of catching up and even surpassing energy demand growth, S&P Global Platts Analytics said on Monday in its newly-released 2022 Energy Outlook. While rebounding demand for oil and gas was the key theme this year, next year, the key theme in energy markets will be the rebound in supply, S&P Global Platts analysts said. Thanks to rising exports of liquefied natural gas (LNG), higher oil and gas production from the U.S. shale patch, and the return of investment in supply from non-OPEC members, supply will not only meet demand next year, but it will also exceed demand and help increase the currently depleted inventory of energy commodities globally, S&P Global Platts Analytics says. (Source: Oil Price)
Carbon Capture Innovations Will Play A Key Role In Net-Zero Ambitions (11 December 2021): By Felicity Bradstock - Following several announcements over the past year from oil majors investing heavily in carbon capture and storage (CCS) technologies, it appears progress has been made. Several governments and oil firms are working together to come up with various carbon capture solutions, from burying CO2 underground to pumping it into rocks. With the big players working together, this could be the mid-term answer to net-zero emissions the world’s been looking for. In the U.K. this week, the Climate Change Committee (CCC) advised the country that the use of the reservoirs under the North Sea for CCS would be most effective, as the technologies get up and running in the region. However, reusing existing onshore wells could also provide an inexpensive and simple means for storing carbon, without having to create new structures or look for alternative land. With operations already taking place in the North Sea, feasibility studies and the development of sites would be relatively simple. (Source: Oil Price)
Another Iranian Pipeline Explosion As Aging Infrastructure Fails (9 December 2021): By Julianne Geiger - Reports are emerging of a pipeline explosion at Iran’s Parsian refinery in the country’s southwest, where an excavator reportedly hit a 10-inch gas condensate pipeline today. While the story is still developing, as reported by Reuters and Iran’s Fars news agency, there were no casualties in the explosion, and rescue squads are still on the scene. This is the third major explosion since this summer affecting Iran’s gas pipeline infrastructure. In mid-November, an explosion at an oil pipeline in southern Iran was attributed to aging infrastructure. No casualties were reported in that incident either, in which a 16-inch outlet line of Iran’s Maroon Gas Injection Station cracked in the explosion, leading to minor leaks which caused a fire. Corrosion and leakage led to the explosion. No damages were reported to the production facilities. (Source: Oil Price)
2 Commodities To Beat Oil In 2022 (8 December 2021): By Alex Kimani - Long-suffering Americans grappling with historic levels of inflation are finally enjoying some reprieve. After a relentless climb, prices at the pump have been heading south, with national average gas prices tumbling to a seven-week low of $3.35 a gallon, according to AAA. Fuel prices started leveling out after President Joe Biden announced on November 23 the biggest-ever release from the Strategic Petroleum Reserve, though experts have labeled it as a mere band-aid. Meanwhile, the natural gas rally cooled off considerably in recent weeks. In early October, natural gas hit $6.47 per million British thermal units, representing the highest level since February 2014. However, that rally has completely reversed, with gas prices falling another 11.5% on Monday to $3.66 per million BTU, the lowest level since July 15. (Source: Oil Price)
Saudi Aramco Signs $15.5-Billion Gas Pipeline Deal With BlackRock (7 December 2021): By Tsvetana Paraskova - Saudi Aramco is selling 49 percent of its gas pipeline network to a consortium led by BlackRock, for which it will receive $15.5 billion—another step of the Saudi oil giant’s push to monetize oil and gas infrastructure assets in deals with foreign investors. Aramco has signed the $15.5-billion lease and leaseback deal for its gas pipeline network with a consortium led by BlackRock Real Assets and Hassana Investment Company, the investment management arm of the General Organization for Social Insurance (GOSI) in Saudi Arabia, the world’s largest oil company said in a statement. Under the deal, Aramco will hold a 51-percent majority stake in its newly formed subsidiary Aramco Gas Pipeline Company, and sell a 49-percent stake to investors led by BlackRock and Hassana. The new company will lease usage rights in Aramco’s gas pipelines network and lease them back to Aramco for a 20-year period. In return, Aramco Gas Pipelines Company will receive a tariff payable by Aramco for the gas products that will flow through the network, backed by minimum commitments on throughput. (Source: Oil Price)
Energy Efficiency Needs To Speed Up To Meet Climate Goals (6 December 2021): By Tsvetana Paraskova - Energy efficiency and ways to reduce emissions from buildings may be the cheapest way to lower carbon footprints and help reach climate goals, but the current pace of investments in energy efficiency is insufficient for a net-zero pathway. Now investors in energy efficiency, including companies and funds, are pushing for government policies targeting more efficient energy use, as they see a lack of action would be a missed opportunity to boost energy efficiency, the Financial Times’ Harry Dempsey notes. The missed opportunity in energy efficiency would be like “$20 bills littering the sidewalk and nobody [picking] them up,” Katie McGinty, Vice President & Chief Sustainability, Government and Regulatory Affairs Officer at energy efficiency and buildings technology company Johnson Controls, told the FT. (Source: Oil Price)
Can Biomass Burning Really Replace Fossil Fuels? (5 December 2021): By Felicity Bradstock - As state governments and oil majors begin shifting their energy strategies to align with net-zero carbon emissions pledges and the earlier adoption of largescale renewable energy projects, not everyone agrees on what it means to ‘go green’. Turning our backs on coal, oil, and gas means finding an alternative to produce in its place, which is why so many are turning to readily available biomass to bridge the gap. But is this energy source really better than the fossil fuels it’s replacing? (Source: Oil Price)
European Oil Majors Doubled Spending On Low-Carbon Energy Sources (2 December 2021): By Tsvetana Paraskova - In just two years, Europe’s oil and gas majors have doubled their planned spending on low-carbon energy—from 10 percent of capex in 2019 to 25 percent of overall spending per current expenditure plans, Wood Mackenzie said on Thursday. In 2019, the European majors were targeting on average $2 billion each per year invested in alternative energy sources, or 10 percent of capex. In 2021, those companies now shoot for $4 billion annual investment on average in clean energy, or 25 percent of capex on average. Spain’s Repsol has the most aggressive target of investment in low-carbon energy—at 35 percent of its total annual spending, Tom Ellacott and Greig Aitken of WoodMac’s Corporate Research team said. (Source: Oil Price)
U.S. Shale Industry To Spend $83 Billion In 2022 (1 December 2021): By Rystad Energy - US shale expenditure is projected to surge 19.4% next year, leaping from an expected $69.8 billion in 2021 to $83.4 billion, the highest level since the onset of the Covid-19 pandemic and signaling the industry’s emergence from a prolonged period of uncertainty and volatility, according to a Rystad Energy report. As the impact of the pandemic on demand and activity levels out, US Land players are poised to loosen their purse strings. As the Omicron variant of the novel coronavirus tightens travel restrictions and raises concerns over a potential industry slowdown, some hesitancy in spending could yet materialize. (Source: Oil Price)